Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The crypto market ends the week at a total market capitalization of $1,09 trillion. Bitcoin is up by over 2% to reach around $27,200. Ethereum increased by nearly 6% to close to $1,700. XRP gained almost 2% in value during a highly volatile week. Almost all altcoins are trading in the green, with virtually no exceptions. The DeFi sector maintains the total value of protocols (TVL)…
Cryptocurrency came into existence in 2009. Since its invention, the market has grown significantly; today, there are over 20000 cryptocurrencies. It has become a competitive market with key industry players and competitors. Further, the industry has developed different terms and phenomena, such as ‘Altseason’ and ‘Altcoins,’ which cryptocurrency experts and traders explain.
Bitcoin was the first and most significant cryptocurrency. However, several other cryptocurrencies have come up, including Monero, Ethereum, XRP, and Dash, which are all alternative coins. These alternatives to Bitcoin are generally referred to as altcoins. Altseason means altcoin season when these alternative coins perform better than BTC.
How Does an AltseThis be because then Happen?
The cryptocurrency market share divides between bitcoin and altcoins, with the BTC taking up the larger market share. This is because the market operates based on the principle of demand and supply. Therefore, an increase in the demand for bitcoin results in an increase in BTC prices, and the effect is that the price of altcoins decreases. As a result, more people are investing in bitcoin against altcoins or fiat money, such as Pounds, Euros, and Dollars.
On the contrary, a decrease in the demand for bitcoin results in a price decline, and the effect is that most of the altcoins’ prices would rise. At this time, more people are investing in altcoins against BTC and fiat money. The period when the price of altcoins is increasing at the expense of the bitcoin is the altseason.
After the growth of bitcoin and the crypto market’s capitalization, several other cryptocurrencies emerged and became competitors to BTC. The bitcoin price was quite high, and investors saw the potential in some cheap altcoins growing to the BTC ranks.
Consequently, BTC and altcoins became the players in the cryptocurrency market share, with bitcoin dominating. As such, any decrease in bitcoin’s market share means an increase in altcoins’ market share, which causes an altseason to occur.
Benefits of Altseason to Investors
During the altseason, people develop a positive view of the altcoins as their prices increase. Investors increase their stack in altcoins at the BTC expense, creating a demand for more altcoins. The money invested in bitcoin flows into various altcoins, creating a domino effect. The price increase occurs quickly, and it can drop unpredictably.
As such, investors can take advantage of the altseason by investing wisely in altcoins during altseason since their price is upward. However, they must be keen to resell the altcoins again before the altseason ends to make a profit. It is like black Friday in the crypto world, and traders can make the most of their earnings.
How to Differentiate Altseason from a Bubble
A bubble results when new players join the market, with the effect that there is an unprecedented reduction in supply. The existing miners sell their cryptocurrency at higher prices to maintain their profits. The action then attracts a wave of new investors into the cryptocurrency market. Bubbles are quite challenging to spot and can only be seen as or when they pop up. However, they can also burst as fast as they pop, and investors who do not sell before the burst can be left with losses.
Altseason, on the other hand, can be spotted by looking at bitcoin’s dominance. If the percentage of capital market share and price of BTC begins to fall, this indicates the beginning of altseason since altcoins are gaining in value.
History of the Past Altseasons
The most remarkable altseason happened in December 2021 after the extreme rise in BTC price. From September 2020 to November 2021, the bitcoin price rose to over $69000. It was trading at under $10,000 in September and hit $69,000 towards the end of the year. Many people heard about Bitcoin or crypto for the first time during this bull market, even though crypto had been around since 2009.
People began viewing the small-priced altcoins as potential cryptocurrencies that would rise to the ranks of bitcoin. As a result, the demand for altcoins began increasing, and there was a massive entry of new investors into the cryptocurrency capital market.
Almost all altcoins experienced an exponential price increase in 2021, with some experiencing a 4000% rise.
Can We Expect An Altseason in 2023?
It is difficult to predict when an altseason will occur since multiple factors can result in its occurrence. However, some of them can serve as indicators. Market dominance is the best indicator, so traders only have to keep an eye on the BTC’s market dominance to detect the possible start of the altseason.
Based on historical data, a fall in bitcoin dominance to below the 40% level results in exponential gains in altcoins. Therefore, a similar fall in BTC dominance would most probably come with a rhyming effect, and the next altseason could be about to happen.
The cryptocurrency market is highly volatile, and you can never be sure of making a profit. The trend is mostly some long periods of lows and short highs. As such, it is always advisable for you to invest what you can afford to lose. The altseason may or may not come today or in the next few weeks. However, it is good to stay prepared for when it happens by diversifying your crypto portfolio with several altcoins.